Student Loan Servicing Transfers Begin This Week As Servicer Upheaval Expands: Key Details

Student Loan Servicing Transfers Begin This Week As Servicer Upheaval Expands: Key Details

As the Department of Education contends with an increasing student loan servicing upheaval, some debtors are already being notified that their student loans are being transferred to a brand new servicer.

Two main nationwide student loan servicers contracted by the Department of Education — Navient
, and FedLoan Servicing — have just lately introduced their intention to exit the federal student loan servicing system. Two smaller nationwide loan servicers (Granite State Management & Resources, and Cornerstone) made related bulletins beforehand, as effectively. As a consequence, the Department should switch over 16 million student loan borrower accounts to new loan servicers within the coming months. Department of Education servicing transfers have traditionally been disruptive occasions for debtors.

Some of the loan servicing transfers are already starting. This week, the Department of Education quietly introduced that some debtors whose accounts are with FedLoan Servicing can have their student loans transferred to MOHELA, one other contracted loan servicer for the Department, within the coming weeks.

“We will soon begin transferring some groups of FedLoan Servicing borrowers to MOHELA,” mentioned the Department in an announcement posted on Wednesday. “If you’re an affected borrower, look out for notices from us and from FedLoan Servicing with more information about this transfer. Be sure to read these notices fully. Additionally, you can expect notices from us and from MOHELA once the transfer is complete. Be sure to read these notices fully as well.”

MOHELA additionally posted an replace by itself web site. “If you recently received notification from FedLoan Servicing that your loans will be transferring to MOHELA, welcome to MOHELA!” reads the discover. “Effective 10/4/2021, the U.S. Department of Education (ED) will/has transferred the customer service of your federal student loan account from FedLoan Servicing to MOHELA, another member of ED’s federal loan servicer team.” MOHELA notes in its assertion that loan servicing transfers don’t influence the underlying phrases, circumstances, or program eligibility for federal student loans.

It is unclear presently whether or not all FedLoan Servicing accounts shall be transferred to MOHELA, or simply a few of them. The Department’s assertion means that different loan servicers, along with MOHELA, might take over some accounts which have been with FedLoan: “The transfer of borrowers from FedLoan Servicing to MOHELA and to other servicers (who will be determined and announced later) is expected to continue over the next year.” The Department didn’t instantly reply to a request for remark.

Meanwhile, Navient introduced earlier this week that it had reached an settlement with a special servicer, Maximus, to take over its government-held federal student loan portfolio. Maximus, like MOHELA, is one other contracted servicer for the Department of Education; Maximus at present primarily handles defaulted federal student loans. However, no transfers to Maximus have begun but, as a result of the Department has to first approve Navient’s proposed association. No particular timeline has but been introduced.

Despite ongoing uncertainty, the Department has been urging debtors to organize for student loan servicing adjustments. Borrowers ought to begin taking steps now to guard themselves by updating their contact data, downloading and retaining key student loan data (together with vital correspondence, fee histories, and different account data), and updating auto-debit data, which can seemingly need to be renewed following any loan servicing switch.

Further Reading

What Navient And FedLoan Borrowers Should Know As Major Student Loan Servicing Changes Loom

Huge Student Loan Servicing Shakeup: This Major Loan Servicer Is Ending Its Contract

Student Loan Borrowers: Expect These 4 Things By January

What A Potential Government Shutdown Means For Student Loan Borrowers

READ:   Study Education